DFS urges relief for student loan borrowers to extend through 2021

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FILE- In this June 15, 2018, file photo, twenty dollar bills are counted in North Andover, Mass. Default on your federal student loans and the government can take up to 15 percent of each paycheck to satisfy your debt. The Education Department can also withhold federal benefits like tax returns and Social Security payments. Garnishment is an effective tool to recoup unpaid loans, private collection agencies enlisted by the Education Department took in over $841.6 million via wage garnishment in the 2018 fiscal year, but it inflicts serious financial strain on borrowers who are already struggling. (AP Photo/Elise Amendola, File)

NEW YORK (WWTI) — With the relief for federal student loan borrowers ending in September, the New York State Department of Financial Services is leading advocacy efforts to protect students borrowers.

According to DFS, relief for federal student loan borrowers under the federal Coronavirus Aid, Relief, and Economic Security Act will end on September 30, 2020. Millions of borrowers will begin repaying their loans again amid the ongoing pandemic.

DFS sent a letter to U.S. Department of Education Secretary Betsy DeVos on behalf of a multi-state coalition urging proactive steps to protect student loan borrowers, including an extension to September 30, 2021.

“Households in New York, and across the country, are already struggling to make ends meet during this crisis,” said Superintendent of Financial Services Linda A. Lacewell. “Once the CARES Act payment suspension ends, millions of student loan borrowers will suddenly have an expense reintroduced into their lives during a time of record unemployment and hardship.”

The letter sent on behalf of Illinois, Washington, Nevada, Virgina, Maine, Colorado, and the District of Columbia urges the following:

  • Expand current coverage to include types of federal student loan borrowers currently excluded
  • Extend the duration of relief for federal student loans to September 30, 2021
  • Ensure the U.S. Department of Education’s contracted student loan servicers are prepared for millions of accounts to change status simultaneously after September 30
  • Streamline access to repayment programs, allowing those who have lost their job or full income could provide low or $0 monthly payments

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